2014-02-07 / Opinion

Moving the Needle

Rhode Island was once again crowned with a sorry distinction when federal jobs data released on Jan. 28 showed that our state of hope is again leading the nation in a rather dismal statistic.

According to the latest report from the state Department of Labor and Training, Rhode Island’s unemployment rate inched upward in December to 9.1 percent. It had previously been measured at 9.0 percent. In all, an estimated 49,900 people in Rhode Island were considered out of work, and an even higher number have dropped out of the labor force.

What’s more, the five key economic indicators used to determine the state’s fiscal health all decreased in December. The last time that happened was in April of 2009.

The General Assembly has for months spoken about the need to “move the needle.” It’s a phrase that Senate President and Newport native M. Teresa Paiva-Weed uses often and it has been picked up as a sort of rallying cry for state legislators when discussing their top priorities for the new year. Unfortunately, lately the needle has been moving in the wrong direction.

During his State of the State speech earlier this month, Gov. Chafee made a strong point of touting recent trend lines that showed Rhode Island making progress in manufacturing, jobs, and overall economic activity. Unfortunately, even if his data were accurate, it seems other states are simply doing better at this point in the economic recovery than we are, and whatever progress is being made is tenuous at best.

Chafee and his counterparts in the General Assembly can propose any number of new initiatives to stimulate the economy, but the reality is that government has a poor track record in creating new jobs.

At its most basic level, news jobs are created when businesses succeed.

Job growth as a policy marker for government is a lofty and often elusive goal to reach. Easing the restrictions placed on businesses and focusing in on our inherent strengths seem to be more earnest pursuits.

Indeed, the employment news is bleak, but economic turnarounds are possible. Minnesota is an example. There, in 2009, unemployment topped out at 8.3 percent. Today, it stands at an astonishing 4.6 percent – well below the national average of 6.7 percent. State leaders are also projecting a $1.08 billion surplus this year.

How did they do it?

By what has been dubbed the “Minnesota Model,” which might be considered a rather unglamorous approach. Instead of adopting the low tax policies and extreme deregulation that are common in southern states, Minnesota has marketed itself as a “high value” state.

Like Rhode Islanders, Minnesotans by nature tend to be hardworking, creative and fiercely independent. They also have similar ideas about working wages, unions, and the institutional role of government.

Since the 2008 downturn, Minnesota has focused on a simple formula. By developing its core strengths in areas like agriculture, big retail, and medical device manufacturing, the state has built a solid base for smaller businesses to grow up around. In turn, they’ve also invested heavily in education, infrastructure improvements, and attracting new businesses that fit within their traditional economic landscape.

Rhode Island, too, has its core strengths to build around; the marine trades, tourism, and light manufacturing all come to mind.

Unfortunately, our government leaders have so far tended to take them for granted and focused their most high-profile efforts on developing new industry sectors that, while promising great potential, also come with a high degree of risk.

The Rhode Island Foundation recently laid out a plan to strengthen these core industries in its “Make It Happen Rhode Island” report, which can be found online at rifoundation.org. It’s a good read and was developed by direct input from a wide range of state business leaders.

Let’s hope that our policymakers take the recommendations to heart. At this point, Rhode Island needs to learn to walk again before it can run.

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